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The Pound Trades Like An Old Beach Roller Coaster

Dean Popplewell profile picture
Dean Popplewell

By Stephen Innes

The Pound continues to trade like an old beach roller coaster.

Equity markets have remained cheered up by the passage of the Senate tax reform bill. But the market closed below intraday high water marks as renewed weakness in the tech sector weighed at the bell. However, it’s not as if the tech sector is under stress but rather some equities rotation remains in vogue as investors seek out opportunities in more tax-reform-sensitive stocks.

So much for what was supposed to be the dollar’s day in the Sun, the G-10 focus was all about Brexit and Cable.

The British Pound

Last night's crucial negotiations put the pound through a wringer. The initial headlines looked positive after some encouraging news on the almost unresolvable question of the Irish border sent the pound skyrocketing to 1.3540. The move was then wholly unwound and some when "no complete deal today" was announced. While the Brexit divorce arrangements looked close on Monday, the talks failed as the DUP reservations scuttled the proposal.

As is so often the case in FX markets, after all was said and done, we are right back to where we started.

The Japanese Yen

The USDJPY has come under pressure on reports Japan is readying its "intercept command system starting in fiscal 2018 to cope with advancements in North Korea’s weapons technology, such as faster-descending missiles launched at a steeper trajectory"( Nikkei news). But the USDJPY and US yields were trading with a heavy tone overnight almost as if waiting for the next wave of risk aversion to rear its ugly head and this morning’s geopolitical gamesmanship continues to validate this concern.

On the flip side, one of the best trades of the year has been to fade USDJPY’s geopolitical hysterics, but this move is far too shallow to

This article was written by

Dean Popplewell profile picture
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.

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